If a Company Owns More Than 20% of the Stock

question 12

Multiple Choice

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

• A)Equity method.
• B)Fair value method.
• C)Historical cost method.
• D)Cost with amortization method.
• E)Effective method.

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Definitions:

Osteoclast

A cell that breaks down bone tissue, playing a critical role in bone remodeling and calcium homeostasis.

Osteoblast

A type of cell that is responsible for bone formation, secreting the matrix for bone and playing a key role in bone growth and healing.

Endosteum

Membranous lining of the medullary cavity and the cavities of spongy bone.

Periosteum

Bones are encased in a thick connective tissue full of blood vessels, except where the joints are located.